-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RosEAeYoFX8ItPFAcj7i8BlC/n8anf55w6MqoOe7IC7i2OcvWpvqwUMObRTdpfC0 Me/r/UEDjPE3KbnQ6tys2A== /in/edgar/work/0000950144-00-013685/0000950144-00-013685.txt : 20001115 0000950144-00-013685.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950144-00-013685 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KOGER EQUITY INC CENTRAL INDEX KEY: 0000835664 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 592898045 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09997 FILM NUMBER: 763304 BUSINESS ADDRESS: STREET 1: 8880 FREEDOM CROSSING TRAIL CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 9047321000 MAIL ADDRESS: STREET 1: 8880 FREEDOM CROSSING TRAIL CITY: JACKSONVILLE STATE: FL ZIP: 32256 10-Q 1 g65182e10-q.txt KOGER EQUITY, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number 1-9997 KOGER EQUITY, INC. (Exact name of registrant as specified in its charter) FLORIDA 59-2898045 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 8880 FREEDOM CROSSING TRAIL JACKSONVILLE, FLORIDA 32256 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (904) 732-1000 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 31, 2000 Common Stock, $.01 par value 26,786,733 shares 2 KOGER EQUITY, INC. AND SUBSIDIARIES INDEX
PAGE NO. PART I. FINANCIAL INFORMATION Independent Accountants' Report................................................................................ 3 Item 1. Financial Statements: Condensed Consolidated Balance Sheets September 30, 2000 and December 31, 1999.................................................................... 4 Condensed Consolidated Statements of Operations for the Three and Nine Month Periods Ended September 30, 2000 and 1999................................................................................. 5 Condensed Consolidated Statement of Changes in Shareholders' Equity for the Nine Month Period Ended September 30, 2000 ................................................................................... 6 Condensed Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2000 and 1999................................................ 7 Notes to Condensed Consolidated Financial Statements for the Three and Nine Month Periods Ended September 30, 2000 and 1999................................................................................. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................................................. 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk................................................ 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings......................................................................................... 14 Item 5. Other Information......................................................................................... 15 Item 6. Exhibits and Reports on Form 8-K.......................................................................... 17 Signatures......................................................................................................... 18
2 3 INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Shareholders of Koger Equity, Inc. Jacksonville, Florida We have reviewed the accompanying condensed consolidated balance sheet of Koger Equity, Inc. and subsidiaries (the "Company") as of September 30, 2000 and the related condensed consolidated statements of operations for the three and nine month periods ended September 30, 2000 and 1999, the condensed consolidated statement of changes in shareholders' equity for the nine month period ended September 30, 2000 and the condensed consolidated statements of cash flows for the nine month periods ended September 30, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of the Company as of December 31, 1999, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 18, 2000, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Certified Public Accountants Jacksonville, Florida October 27, 2000 3 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS KOGER EQUITY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED - SEE INDEPENDENT ACCOUNTANTS' REPORT) (IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ ASSETS Real Estate Investments: Operating properties: Land $ 138,214 $ 140,061 Buildings 800,007 784,769 Furniture and equipment 2,541 2,693 Accumulated depreciation (147,445) (137,452) --------- --------- Operating properties - net 793,317 790,071 Properties under construction: Land 2,128 8,347 Buildings 8,007 41,912 Undeveloped land held for investment 13,899 16,034 Undeveloped land held for sale, net of allowance 76 1,103 Cash and temporary investments 4,096 -- Accounts receivable, net of allowance for uncollectible accounts of $548 and $440 11,717 10,512 Investment in Koger Realty Services, Inc. 2,316 2,319 Cost in excess of fair value of net assets acquired, net of accumulated amortization of $1,153 and $1,025 1,402 1,530 Other assets 12,316 13,911 --------- --------- TOTAL ASSETS $ 849,274 $ 885,739 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgages and loans payable $ 336,405 $ 351,528 Accounts payable 3,424 12,716 Accrued real estate taxes payable 10,173 1,383 Accrued liabilities - other 9,138 13,162 Dividends payable 9,374 9,370 Advance rents and security deposits 7,076 6,570 --------- --------- Total Liabilities 375,590 394,729 --------- --------- Minority interest 23,275 23,184 --------- --------- Shareholders' Equity: Common stock 295 288 Capital in excess of par value 467,664 457,945 Notes receivable from stock sales (6,456) -- Retained earnings 23,040 30,546 Treasury stock, at cost (34,134) (20,953) --------- --------- Total Shareholders' Equity 450,409 467,826 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 849,274 $ 885,739 ========= =========
See Notes to Condensed Consolidated Financial Statements. 4 5 KOGER EQUITY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED - SEE INDEPENDENT ACCOUNTANTS' REPORT) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ----------------------- ------------------------ 2000 1999 2000 1999 -------- -------- --------- -------- REVENUES Rental and other rental services $ 40,750 $ 39,157 $ 124,287 $116,340 Management fees 604 641 1,255 1,735 Interest 229 189 478 284 Income from Koger Realty Services, Inc. 191 471 352 917 -------- -------- --------- -------- Total revenues 41,774 40,458 126,372 119,276 -------- -------- --------- -------- EXPENSES Property operations 16,267 16,272 47,964 46,240 Depreciation and amortization 8,760 8,445 25,886 23,734 Mortgage and loan interest 6,882 5,301 20,559 16,313 General and administrative 2,001 2,192 16,088 6,246 Direct cost of management fees 309 374 607 1,037 Other 55 54 191 167 -------- -------- --------- -------- Total expenses 34,274 32,638 111,295 93,737 -------- -------- --------- -------- INCOME BEFORE GAIN ON SALE OR DISPOSITION OF ASSETS, INCOME TAXES AND MINORITY INTEREST 7,500 7,820 15,077 25,539 Gain on sale or disposition of assets 2,033 3,861 6,437 3,865 -------- -------- --------- -------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 9,533 11,681 21,514 29,404 Income taxes (174) (107) (19) 66 -------- -------- --------- -------- INCOME BEFORE MINORITY INTEREST 9,707 11,788 21,533 29,338 Minority interest 361 250 992 926 -------- -------- --------- -------- NET INCOME $ 9,346 $ 11,538 $ 20,541 $ 28,412 ======== ======== ========= ======== EARNINGS PER SHARE: Basic $ 0.35 $ 0.43 $ 0.77 $ 1.07 ======== ======== ========= ======== Diluted $ 0.35 $ 0.43 $ 0.76 $ 1.05 ======== ======== ========= ======== WEIGHTED AVERAGE SHARES: Basic 26,710 26,725 26,707 26,664 ======== ======== ========= ======== Diluted 26,920 27,101 26,991 27,003 ======== ======== ========= ========
See Notes to Condensed Consolidated Financial Statements. 5 6 KOGER EQUITY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED - SEE INDEPENDENT ACCOUNTANTS' REPORT) (IN THOUSANDS)
COMMON STOCK NOTES ---------------- CAPITAL IN RECEIVABLE TOTAL SHARES PAR EXCESS OF FROM STOCK RETAINED TREASURY SHAREHOLDERS' ISSUED VALUE PAR VALUE SALES EARNINGS STOCK EQUITY ------ ----- ---------- ---------- -------- -------- ------------- Balance, December 31, 1999 28,756 $288 $457,945 $ 30,546 $(20,953) $467,826 Common stock sold 173 $(5,072) 6,956 2,057 Treasury stock purchased (20,428) (20,428) 401(k) Plan contribution 134 128 262 Restricted stock issued (48) (48) Options exercised 764 7 9,460 (1,384) 163 8,246 Dividends declared (28,047) (28,047) Net income 20,541 20,541 ------ ---- -------- ------- -------- -------- -------- Balance, September 30, 2000 29,520 $295 $467,664 $(6,456) $ 23,040 $(34,134) $450,409 ====== ==== ======== ======= ======== ======== ========
See Notes to Condensed Consolidated Financial Statements. 6 7 KOGER EQUITY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED - SEE INDEPENDENT ACCOUNTANTS' REPORT) (IN THOUSANDS)
NINE MONTH PERIOD ENDED SEPTEMBER 30, ------------------------ 2000 1999 -------- --------- OPERATING ACTIVITIES Net income $ 20,541 $ 28,412 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,886 23,734 Income from Koger Realty Services, Inc. (352) (917) Provision for uncollectible accounts 622 230 Minority interest 992 926 Gain on sale or disposition of assets (6,437) (3,865) Changes in assets and liabilities: Increase (decrease) in accounts payable, accrued liabilities and other liabilities (3,014) 3,201 Increase in receivables and other assets (891) (1,912) -------- --------- Net cash provided by operating activities 37,347 49,809 -------- --------- INVESTING ACTIVITIES Property acquisitions (10) -- Building construction expenditures (12,075) (42,671) Tenant improvements to first generation space (3,361) (4,622) Tenant improvements to existing properties (7,108) (9,382) Building improvements (2,834) (2,582) Energy management improvements (196) (20) Deferred tenant costs (2,495) (1,958) Additions to furniture and equipment (270) (612) Dividends received from Koger Realty Services, Inc. 355 365 Proceeds from sales of assets 49,743 68,775 -------- --------- Net cash provided by investing activities 21,749 7,293 -------- --------- FINANCING ACTIVITIES Proceeds from exercise of stock options 7,454 1,613 Proceeds from sales of common stock 2,057 330 Proceeds from mortgages and loans 68,783 118,292 Dividends paid (28,043) (25,301) Distributions paid to limited partners (901) (794) Treasury stock purchased (20,428) (852) Principal payments on mortgages and loans (83,906) (120,203) Financing costs (16) (503) -------- --------- Net cash used in financing activities (55,000) (27,418) -------- --------- Net increase in cash and cash equivalents 4,096 29,684 Cash and cash equivalents - beginning of period -- 4,827 -------- --------- Cash and cash equivalents - end of period $ 4,096 $ 34,511 ======== ========= SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for interest, net of amount capitalized $ 20,717 $ 16,174 ======== ========= Cash paid during the period for income taxes $ 155 $ 105 ======== =========
See Notes to Condensed Consolidated Financial Statements. 7 8 KOGER EQUITY, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED - SEE INDEPENDENT ACCOUNTANTS' REPORT) 1. BASIS OF PRESENTATION. The condensed consolidated financial statements include the accounts of Koger Equity, Inc., its wholly-owned subsidiaries and Koger-Vanguard Partners, L.P. (the "Company"). All material intercompany transactions have been eliminated. The financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission related to interim financial statements. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1999, included in the Company's Form 10-K Annual Report for the year ended December 31, 1999. The balance sheet at December 31, 1999, has been derived from the audited financial statements at that date and is condensed. All adjustments of a normal recurring nature which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods have been made. Results of operations for the nine month period ended September 30, 2000, are not necessarily indicative of the results to be expected for the full year. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." The objective of this SAB is to provide further guidance on revenue recognition issues in the absence of authoritative literature addressing a specific arrangement or a specific industry. The Company is required to adopt the guidance in the SAB no later than the fourth quarter of 2000. Adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations. The SEC has recently indicated it intends to issue further guidance with respect to adoption of specific issues addressed by SAB No. 101. Until such time as this additional guidance is issued, the Company is unable to assess the impact, if any, it may have on its financial position or results of operations. In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities". In June 2000, the FASB issued SFAS No. 138, which amends certain provisions of SFAS 133 to clarify four areas causing difficulties in implementation. The amendment included expanding the normal purchase and sale exemption for supply contracts, permitting the offsetting of certain intercompany foreign currency derivatives and thus reducing the number of third party derivatives, permitting hedge accounting for foreign-currency denominated assets and liabilities, and redefining interest rate risk to reduce sources of ineffectiveness. The Company will adopt SFAS 133 and the corresponding amendments under SFAS 138 on January 1, 2001. SFAS 133, as amended by SFAS 138, is not expected to have a material impact on the Company's consolidated results of operations, financial position or cash flows. 2. ORGANIZATION. Koger Equity, Inc. ("KE"), a Florida corporation, was incorporated in 1988 for the purpose of investing in the ownership of income producing properties, primarily commercial office buildings. KE is self-administered and self-managed. Koger-Vanguard Partners, L.P. ("KVP") is a Delaware limited partnership, for which KE is the general partner. Koger Equity's common stock is listed on the New York Stock Exchange under the ticker symbol KE. In addition to managing its own properties, KE, through certain related entities, provides property management services to third parties. In conjunction with Koger Real Estate Services, Inc. ("KRES"), a Florida corporation and a wholly-owned subsidiary of KE, KE manages eight office buildings owned by Centoff Realty Company, Inc. ("Centoff"), a subsidiary of Morgan Guaranty Trust Company of New York. 8 9 3. FEDERAL INCOME TAXES. The Company is operated in a manner so as to qualify, and has elected tax treatment, as a real estate investment trust under the Internal Revenue Code (a "REIT"). As a REIT, the Company is required to distribute annually at least 95 percent of its REIT taxable income to its shareholders. To the extent that the Company pays dividends equal to 100 percent of REIT taxable income, the earnings of the Company are not taxed at the corporate level. However, the use of net operating loss carryforwards, which may be used to reduce REIT taxable income, are limited for alternative minimum tax purposes. Since the Company had no REIT taxable income during 1999 and does not expect to have REIT taxable income during 2000, no provision has been made for Federal income taxes. However, the Company has recorded a provision of $130,000 for alternative minimum tax for the nine month period ended September 30, 2000. In addition, the Company has recorded a receivable of $147,000 for the refund of alternative minimum taxes paid for 1999. 4. STATEMENTS OF CASH FLOWS. Cash in excess of daily requirements is invested in short-term monetary securities. Such temporary cash investments have an original maturity date of less than three months and are deemed to be cash equivalents for purposes of the statements of cash flows. During the nine month period ended September 30, 2000, the Company contributed 15,557 shares of common stock to the Company's 401(k) Plan. These shares had a value of approximately $262,000 based on the closing price of the Company's common stock on the American Stock Exchange on December 31, 1999. During the nine month period ended September 30, 1999, the Company contributed 15,603 shares of common stock to the Company's 401(k) Plan. These shares had a value of approximately $268,000 based on the closing price of the Company's common stock on the American Stock Exchange on December 31, 1998. In addition, the Company issued 19,695 shares of common stock as payment for certain 1998 bonuses for senior management. These shares had a value of approximately $285,000 based on the closing price of the Company's common stock on the American Stock Exchange on February 18, 1999. 5. EARNINGS PER COMMON SHARE. Basic earnings per common share has been computed based on the weighted average number of shares of common stock outstanding for each period. Diluted earnings per common share is similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares (options) had been issued. The treasury stock method is used to calculate dilutive shares which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options assumed to be exercised. 6. MORTGAGES AND LOANS PAYABLE. At September 30, 2000, the Company had $336,405,000 of loans outstanding, which are collateralized by mortgages on certain operating properties. In conjunction with the sale of the El Paso Center, the Company amended the $89.5 million promissory note with Northwestern Mutual Life Insurance Company ("Northwestern"). This amendment provided for the release of the El Paso Center from the collateral for this loan and required that collateral properties be substituted within 180 days. Until collateral is substituted, $9 million of the outstanding balance of this loan will be subject to recourse to the Company. If collateral is not substituted within 180 days, the Company will be required to make a prepayment of principal in the amount of $9 million plus pay yield maintenance on this amount. Annual maturities for mortgages and loans payable are as follows (in thousands):
YEAR ENDING DECEMBER 31, ------------------------ 2000 $ 1,463 2001 86,633 2002 12,722 2003 5,238 2004 5,674 Subsequent Years 224,675 -------- Total $336,405
======== 9 10 7. DIVIDENDS. The Company paid the following dividends during the nine months ended September 30, 2000:
PAYMENT DATE RECORD DATE DIVIDEND PER SHARE ---------------- ----------------- ------------------ February 3, 2000 December 31, 1999 $0.35 May 4, 2000 March 31, 2000 $0.35 August 3, 2000 June 30, 2000 $0.35
During the quarter ended September 30, 2000, the Company's Board of Directors declared a quarterly dividend of $0.35 per share payable on November 2, 2000, to shareholders of record on September 30, 2000. A portion of the dividends paid during 2000 may be treated as return of capital for income tax purposes. 8. NOTES RECEIVABLE FROM STOCK SALES. During February 2000, the Company's Board of Directors (the "Board") approved a program to lend up to $2.5 million to executive officers and department heads for the purpose of exercising options. The loans have a term of 60 months and bear interest at 150 basis points over the applicable LIBOR rate. Through September 30, 2000, options have been exercised to acquire 185,027 shares of common stock under this program. In conjunction with the Company's plan to repurchase up to 2.65 million shares of common stock (the "Shares"), the Board granted to Thomas Crocker, Chief Executive Officer, the right to purchase up to 500,000 Shares and to Robert Onisko, Chief Financial Officer, the right to purchase up to 150,000 Shares. These officers are entitled to make purchases of one Share of every three Shares purchased by the Company as part of this plan. The Shares may be purchased at the same time and for the same prices as the Company purchases Shares. In addition, the Company will loan up to 75 percent of the purchase price for these Shares to Mr. Crocker and Mr. Onisko. These loans will be collateralized by the Shares purchased and will bear interest at 150 basis points over the applicable LIBOR rate. Approximately $836,000 of these loans are subject to recourse and the remaining loans will be without recourse. Accrued interest on these loans is a recourse obligation and any paid interest is not refundable if the stock is returned in settlement of the loans. Through September 30, 2000, Mr. Crocker acquired 302,495 Shares and Mr. Onisko acquired 100,831 Shares under this plan. 9. SHAREHOLDER RIGHTS PLAN. On September 30, 1990, the Board of Directors of the Company declared a dividend of distribution of one right to purchase one share of common stock of the Company on each share of common stock outstanding on October 11, 1990 (the "Rights"). This distribution was done pursuant to a Shareholder Rights Plan (the "Plan") adopted by the Board on September 30, 1990. The Rights were issued pursuant to a Common Stock Rights Agreement (the "Rights Agreement") which, under its terms, was scheduled to expire along with the Rights on September 30, 2000. Pursuant to an amendment to the Rights Agreement dated as of August 17, 2000 between the Company and its successor Rights Agent (the "Rights Agent"), the Rights Agreement and the Rights have been extended 10 years, through September 30, 2010. 10. SUBSEQUENT EVENTS. The Company reached an agreement with Crocker Realty Trust to provide management services for the 6.1 million square foot portfolio of Crocker Realty Trust subject to documentation. During November 2000, the agreement with Centoff to manage eight office buildings was terminated due to the sale of these buildings by Centoff. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes appearing elsewhere in this Form 10-Q, and the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the period ended December 31, 1999. RESULTS OF OPERATIONS. Rental and other rental services revenues totaled $40,750,000 for the quarter ended September 30, 2000, compared to $39,157,000 for the quarter ended September 30, 1999. This increase in rental revenues resulted primarily from (i) increases in the Company's average rental rate and (ii) increases in rental revenues ($4,323,000) from the properties acquired and construction 10 11 completed during 1999 and 2000. The effect of these increases was partially offset by the reduction of rental revenues ($3,932,000) caused by the sale of two office parks during 1999 and two office parks during 2000. At September 30, 2000, the Company's buildings were on average 90 percent leased with an average rental rate of $17.87. Excluding the four buildings which were in the lease-up period at September 30, 2000, the remainder of the Company's buildings were on average 92 percent leased. At September 30, 1999, the Company's buildings were on average 92 percent leased with an average rental rate of $16.81. Rental and other rental services revenues increased to $124,287,000 during the nine month period ended September 30, 2000, compared to $116,340,000 during the same period last year. This increase resulted primarily from (i) increases in the Company's average rental rate and (ii) increases in rental revenues ($12,443,000) from the properties acquired and construction completed during 1999 and 2000. The effect of these increases was partially offset by the reduction of rental revenues ($10,781,000) caused by the sale of office parks as described above. Management fee revenues totaled $604,000 for the quarter ended September 30, 2000, compared to $641,000 for the quarter ended September 30, 1999. This decrease was due to the reduction in fees earned under the management contract with Centoff due to the management contract for one of the Centoff centers being transferred from the Company to Koger Realty Services, Inc. ("KRSI") on January 1, 2000. The Company earned management fee revenues totaling $153,000 for the management and leasing of this property during the quarter ended September 30, 1999. Management fee revenues decreased to $1,255,000 during the nine month period ended September 30, 2000, compared to $1,735,000 during the same period last year, due to the reduction in fees earned under the management contract with Centoff. During the nine months ended September 30, 1999, the Company earned management fee revenues totaling $834,000 under agreements which were terminated during 1999. Income from Koger Realty Services, Inc. totaled $191,000 for the quarter ended September 30, 2000, compared to $471,000 for the quarter ended September 30, 1999. This decrease was due primarily to the increase in the accrual for compensation expense related to a bonus plan which is based on KE's common stock price. For the nine months ended September 30, 2000, income from Koger Realty Services, Inc. declined $565,000, compared to the same period last year, primarily due to an increase in general and administrative expenses. Property operations expense includes charges for utilities, real estate taxes, janitorial, maintenance, property insurance, provision for uncollectible rents and management costs. The amount of property operations expense and its percentage of total rental revenues for the applicable periods are as follows:
PERCENT OF TOTAL PERIOD AMOUNT RENTAL REVENUES - ---------------------------- ----------- ---------------- September 30, 2000 - Quarter $16,267,000 39.9% September 30, 1999 - Quarter 16,272,000 41.6% September 30, 2000 - Nine Months 47,964,000 38.6% September 30, 1999 - Nine Months 46,240,000 39.7%
For the nine months ended September 30, 2000, property operations expense increased primarily due to (i) increased accruals for real estate taxes, (ii) increased accruals to provision for uncollectible accounts and (iii) increases in property operations expense ($4,959,000) for the properties acquired and construction completed during 1999 and 2000. The effect of these increases was partially offset by the decline in property operations expense ($4,799,000) caused by the sale of two office parks during 1999 and two office parks during 2000. Depreciation expense has been calculated on the straight-line method based upon the useful lives of the Company's depreciable assets, generally 3 to 40 years. Depreciation expense increased $679,000 and $2,378,000, respectively, for the three and nine month periods ended September 30, 2000, compared to the same periods last year, due to the properties acquired and construction completed during 1999 and 2000. Amortization expense decreased $364,000 and $226,000, respectively, for the three and nine month periods ended September 30, 2000, compared to the same periods last year, due primarily to amortization of deferred tenant costs related to properties sold during 1999. 11 12 Interest expense increased by $1,581,000 and $4,246,000, respectively, during the three and nine month periods ended September 30, 2000, compared to the same periods last year, primarily due to the increase in the average balance of mortgages and loans payable. At September 30, 2000, the weighted average interest rate on the Company's outstanding debt was approximately 8.04 percent. General and administrative expenses for the three month periods ended September 30, 2000 and 1999, totaled $2,001,000 and $2,192,000, respectively. This decrease is primarily due to a reduction in legal and other professional fees. General and administrative expenses for the nine month periods ended September 30, 2000 and 1999, totaled $16,088,000 and $6,246,000, respectively. This increase is primarily due to certain non-recurring charges for (i) costs of a corporate reorganization ($6,832,000), (ii) severance payments made to certain former senior executives ($2,562,000), (iii) changes in termination benefits under the supplemental executive retirement plan ($584,000), (iv) payments to retiring directors ($138,000) and (v) initial fees for listing on the New York Stock Exchange ($161,000). Direct costs of management contracts decreased $65,000 for the three month period ended September 30, 2000, compared to the same period last year, due to decreased costs associated with providing property management services for the Centoff management contract caused by the transfer of the management contract for one of the Centoff centers to KRSI. The Company incurred costs totaling $126,000 for the management and leasing of this property during the quarter ended September 30, 1999. Compared to the prior year, direct costs of management contracts decreased $430,000 for the nine months ended September 30, 2000. The Company incurred costs totaling $428,000, during the nine months ended September 30, 1999, for the management and leasing of (i) the property for which the management contract was transferred to KRSI and (ii) the property which was sold by Centoff during 1999. Net income totaled $9,346,000 for the quarter ended September 30, 2000, compared to net income of $11,538,000 for the corresponding period of 1999. This decrease is due primarily to (i) an increase in interest expense, (ii) an increase in depreciation expense and (iii) a decrease in gain on sale or disposition of assets. These items were partially offset by increases in rental revenues. Net income decreased $7,871,000 during the nine month period ended September 30, 2000, compared to the same period last year. This decrease is due primarily to increases in (i) general and administrative expenses due to corporate reorganization costs, (ii) property operations expense, (iii) interest expense and (iv) depreciation expense. These items were partially offset by increases in (i) gain on sale or disposition of assets and (ii) rental revenues. LIQUIDITY AND CAPITAL RESOURCES. OPERATING ACTIVITIES - During the nine months ended September 30, 2000, the Company generated approximately $37.3 million in net cash from operating activities. The Company's primary internal sources of cash are (i) the collection of rents from buildings owned by the Company and (ii) the receipt of management fees paid to the Company in respect of properties managed on behalf of Centoff. As a REIT for Federal income tax purposes, the Company is required to pay out annually, as dividends, 95 percent of its REIT taxable income (which, due to non-cash charges, including depreciation and net operating loss carryforwards, may be substantially less than cash flow). In the past, the Company has paid out dividends in amounts at least equal to its REIT taxable income. The Company believes that its cash provided by operating activities will be sufficient to cover debt service payments and to pay the dividends required to maintain REIT status through 2000. The level of cash flow generated by rents depends primarily on the occupancy rates of the Company's buildings and changes in rental rates on new and renewed leases and under escalation provisions in existing leases. At September 30, 2000, leases representing approximately 6.2 percent of the gross annualized rent from the Company's properties, without regard to the exercise of options to renew, were due to expire during the remainder of 2000. This represents 215 leases for space in buildings located in 18 of the 23 centers or locations in which the Company owns buildings. Certain of these tenants may not renew their leases or may reduce their demand for space. During the nine months ended September 30, 2000, leases were renewed on approximately 53 percent of the Company's usable square feet, which were scheduled to expire during the nine month period. For those leases which were renewed, the average rental rate increased from $16.82 to $18.31, an increase of 8.9 percent. Based upon the number 12 13 of leases which will expire during 2000 and 2001 and the competition for tenants in the markets in which the Company operates, the Company has and expects to continue to offer incentives to certain new and renewal tenants. These incentives may include the payment of tenant improvement costs and in certain markets reduced rents during initial lease periods. The Company continues to benefit from existing economic conditions and stable vacancy levels for office buildings in many of the metropolitan areas in which the Company owns buildings. The Company believes that the southeastern and southwestern regions of the United States offer excellent growth potential due to their diverse regional economies, expanding metropolitan areas, skilled work force and moderate labor costs. However, the Company cannot predict whether such economic growth will continue. Cash flow from operations could be reduced if economic growth were not to continue in the Company's markets and if this resulted in lower occupancy and rental rates for the Company's buildings. Governmental tenants (including the State of Florida and the United States Government) which account for approximately 19.8 percent of the Company's leased space at September 30, 2000, may be subject to budget reductions in times of recession and governmental austerity measures. Consequently, there can be no assurance that governmental appropriations for rents may not be reduced. Additionally, certain of the Company's private sector tenants may reduce their need for office space in the future. INVESTING ACTIVITIES - At September 30, 2000, substantially all of the Company's invested assets were in real properties. Improvements to the Company's existing properties have been financed through internal operations. During the nine month period ended September 30, 2000, the Company's expenditures for improvements to existing properties decreased $1,846,000 from the corresponding period of the prior year primarily due to a decrease in expenditures for tenant improvements. This decrease in expenditures for tenant improvements was primarily due to (i) the sale of two office parks during the third quarter of 1999 and (ii) fewer leased square feet expiring during the first nine months of 2000 compared to 1999. On June 1, 2000, the Company sold the Tulsa Center (containing 476,400 usable square feet and 10 acres of undeveloped land) for approximately $28,844,000, net of selling costs. The Company sold approximately 5.6 acres of unimproved land located in Richmond, Virginia for approximately $799,000, net of selling costs, on July 10, 2000. On August 11, 2000, the Company sold the El Paso Center (containing 315,600 usable square feet) for approximately $20,077,000, net of selling costs. The sale of these properties when combined with certain property adjustments resulted in a gain of $6,437,000. The Company has two buildings under construction, which will contain approximately 148,000 usable square feet. Expenditures for construction of these two buildings are expected to total approximately $14.9 million, excluding land and tenant improvement costs. FINANCING ACTIVITIES - The Company has a $150 million secured revolving credit facility ($82 million of which was outstanding on September 30, 2000 at a weighted average interest rate of 8.07 percent) provided by First Union National Bank of Florida, AmSouth Bank, N.A., Citizens Bank of Rhode Island, Compass Bank and Guaranty Federal Bank. Loan maturities and normal amortization of mortgages and loans payable are expected to total approximately $4.9 million over the next 12 months. However, the Company's secured revolving credit facility will mature in December 2001. The Company has filed shelf registration statements with respect to the possible issuance of up to $300 million of its common and/or preferred stock and the Company has issued $91.6 million of its common stock under such registration statements. At September 30, 2000, the Company had 20 office buildings, containing approximately 1.6 million usable square feet, which were unencumbered. The foregoing discussion contains forward-looking statements concerning 2000. The actual results of operations for 2000 could differ materially from those projected because of factors affecting the financial markets, reactions of the Company's existing and prospective investors, the ability of the Company to identify and execute development projects and acquisition opportunities, the ability of the Company to renew and enter into new leases on favorable terms, and other risk factors. See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - - Cautionary Statement Relevant to Forward-Looking Information for Purpose of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995" in the Company's Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1999. 13 14 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK INTEREST RATE RISK. The Company currently has a $150 million secured revolving credit facility with variable interest rates. The Company may incur additional variable rate debt in the future to meet its financing needs. Increases in interest rates on such debt could increase the Company's interest expense, which would adversely affect the Company's cash flow and the amount of distributions to its shareholders. The Company has not entered into any interest rate hedge contracts to mitigate this interest rate risk. As of September 30, 2000, the Company had $82 million outstanding under the secured revolving credit facility. If the weighted average interest rate on this variable rate debt changes 100 basis points higher or lower, annual interest expense would be increased or decreased by approximately $820,000. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. 14 15 ITEM 5. OTHER INFORMATION (a) The following table sets forth, with respect to each Koger Center or location at September 30, 2000, gross square feet, usable square feet, percentage leased, and the average annual rent per usable square foot leased.
AVERAGE ANNUAL RENT PER GROSS USABLE PERCENT SQUARE KOGER CENTER/ LOCATION SQUARE FEET SQUARE FEET LEASED (1) FOOT (2) - ---------------------- ----------- ----------- ---------- -------- Atlanta Chamblee 1,199,800 986,133 97% $ 19.18 Atlanta Gwinnett (3) 274,400 228,176 81% 20.31 Atlanta Perimeter 184,000 150,789 94% 23.68 Austin 458,400 371,048 100% 22.64 Birmingham Colonnade (3) 471,200 393,926 80% 18.16 Birmingham Colonnade-Retail 112,600 112,186 70% 12.01 Charlotte Carmel 339,200 285,539 95% 19.60 Charlotte University 190,600 161,805 98% 19.90 Charlotte Vanguard 548,200 484,199 89% 16.12 Greensboro South 749,200 611,895 81% 16.31 Greensboro Wendover 98,300 78,936 69% 19.34 Greenville Park Central 161,700 138,796 84% 18.57 Greenville Roper Mt 431,000 350,313 87% 17.94 Jacksonville Baymeadows 793,400 664,245 99% 13.15(4) Jacksonville JTB 322,500 276,544 100% 13.28 Memphis Germantown (3) 562,600 459,679 90% 19.84 Orlando Central 699,700 552,284 96% 16.49 Orlando Lake Mary 318,000 268,472 96% 22.10 Orlando University 337,800 276,966 100% 19.70 Richmond Paragon 154,300 126,593 98% 19.91 San Antonio Airport 258,800 203,373 91% 19.97 San Antonio West 1,102,200 919,399 87% 16.57 St. Petersburg (3) 715,500 587,265 78% 16.50 Tallahassee 960,300 788,498 89% 19.00 ---------- --------- Total 11,443,700 9,477,059 ========== ========= Weighted Average - Total Company 90% $17.87 ===== ====== Weighted Average - Operational Buildings 92% $17.79 ===== ====== Weighted Average - Buildings in Lease-up 48% $21.82 ===== ======
(1) The percent leased rates have been calculated by dividing total multi-tenant usable square feet leased in an office building by multi-tenant usable square feet in such building. (2) Rental rates are computed by dividing (a) total annualized base rents (which excludes expense pass-throughs and reimbursements) for a Koger Center or location as of September 30, 2000 by (b) the multi-tenant usable square feet applicable to such total annualized rents. (3) Includes a building which is currently in the lease-up period. (4) Excludes corporate office space from calculation. Includes the effect of three net leases where tenants lease the entire building and pay certain operating costs in addition to base rent. 15 16 (b) The following schedule sets forth for all of the Company's buildings (i) the number of leases which will expire during the remainder of calendar year 2000 and calendar years 2001 through 2008, (ii) the total multi-tenant usable area in square feet covered by such leases, (iii) the percentage of total multi-tenant usable square feet represented by such leases, (iv) the average annual rent per square foot for such leases, (v) the current annualized rents represented by such leases, and (vi) the percentage of gross annualized rents contributed by such leases. This information is based on the buildings owned by the Company on September 30, 2000 and on the terms of leases in effect as of September 30, 2000, on the basis of then existing base rentals, and without regard to the exercise of options to renew. Furthermore, the information below does not reflect that some leases have provisions for early termination for various reasons, including, in the case of government entities, lack of budget appropriations. Leases were renewed on approximately 53 percent of the Company's multi-tenant usable square feet, which were scheduled to expire during the nine month period ended September 30, 2000.
PERCENTAGE OF AVERAGE PERCENTAGE TOTAL SQUARE ANNUAL RENT TOTAL OF TOTAL NUMBER OF NUMBER OF FEET LEASED PER SQUARE ANNUALIZED ANNUAL. RENTS LEASES SQUARE FEET REPRESENTED FOOT UNDER RENTS UNDER REPRESENTED BY PERIOD EXPIRING EXPIRING EXPIRING LEASES EXPIRING LEASES EXPIRING LEASES EXPIRING LEASES - ------ --------- ----------- --------------- --------------- --------------- --------------- 2000 215 542,132 6.5% $ 17.33 $ 9,394,204 6.2% 2001 532 1,686,801 20.1% 16.66 28,109,272 18.7% 2002 382 1,230,881 14.6% 18.37 22,613,672 15.1% 2003 375 1,548,933 18.4% 18.22 28,214,847 18.8% 2004 251 1,336,683 15.9% 17.39 23,244,749 15.5% 2005 114 670,529 8.0% 19.56 13,116,132 8.7% 2006 12 229,375 2.7% 20.88 4,788,752 3.2% 2007 9 290,289 3.5% 17.05 4,948,804 3.3% 2008 13 228,915 2.7% 19.52 4,468,346 3.0% Other 17 634,939 7.6% 17.64 11,199,281 7.5% ----- --------- ----- --------- ------------ ----- Total 1,920 8,399,477 100.0% $ 17.87 $150,098,059 100.0% ===== ========= ===== ========= ============ =====
(c) The Company believes that Funds from Operations is one measure of the performance of an equity real estate investment trust. Funds from Operations should not be considered as an alternative to net income as an indication of the Company's financial performance or to cash flow from operating activities (determined in accordance with generally accepted accounting principles) as a measure of the Company's liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company's needs. Funds from Operations is calculated as follows (in thousands):
Three Month Period Nine Month Period Ended September 30, Ended September 30, --------------------------- --------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Net Income $ 9,346 $ 11,538 $ 20,541 $ 28,412 Depreciation - real estate 7,889 7,204 23,348 21,007 Amortization - deferred tenant costs 500 874 1,431 1,702 Amortization - goodwill 43 42 128 127 Minority interest 361 250 992 926 Gain on sale of operating properties (1,709) (3,861) (6,385) (3,861) Gain on sale or disposition of non-operating assets (324) -- (52) (4) -------- -------- -------- -------- Funds from Operations $ 16,106 $ 16,047 $ 40,003 $ 48,309 ======== ======== ======== ========
16 17 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT NUMBER DESCRIPTION 3(a) Articles of Amendment and Restatement of Articles of Incorporation of Koger Equity, Inc., dated May 18, 2000. 3(b) Koger Equity, Inc. By-Laws, as Amended and Restated on February 17, 2000. 4(b)(1)(G) Sixth Amendment to Rights Agreement, dated as of August 17, 2000, between Koger Equity, Inc. and Wells Fargo Bank Minnesota, N.A., as successor Rights Agent. Incorporated by reference to Exhibit 4(1) to an Amendment on Form 8-A/A, dated August 17, 2000, to the Registration Statement of the Registrant on Form 8-A, dated January 28, 2000 (File No. 1-9997). 10(a)(5) Koger Equity, Inc. 1998 Equity and Cash Incentive Plan, as Amended and Restated. Incorporated by reference to Exhibit A to Registrant's Proxy Statement, dated April 18, 2000 (File No. 1-9997). 10(j)(2)(E) First Amendment of Tranche B Promissory Note, dated August 11, 2000, between Koger Equity, Inc. and The Northwestern Mutual Life Insurance Company. 11 Earnings Per Share Computations. 15 Letter re: Unaudited interim financial information. 27 Financial Data Schedule (for SEC use only). (b) Reports on Form 8-K On August 16, 2000, the Company filed a Form 8-K (dated June 6, 2000) reporting under Item 5, Other Events, the sale of the Company's office center in Tulsa, Oklahoma and providing under Item 7, Financial Statements and Exhibits, Koger Equity, Inc. News Release dated June 6, 2000. On August 16, 2000, the Company filed a Form 8-K reporting under Item 5, Other Events, the sale of the Company's office center in El Paso, Texas and providing under Item 7, Financial Statements and Exhibits, Koger Equity, Inc. News Release dated August 16, 2000. 17 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KOGER EQUITY, INC. Registrant /s/ ROBERT E. ONISKO -------------------------- ROBERT E. ONISKO CHIEF FINANCIAL OFFICER Dated: November 10, 2000 /s/ JAMES L. STEPHENS -------------------------- JAMES L. STEPHENS VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER 18 EX-3.(A) 2 g65182ex3-a.txt RESTATEMENT OF ARTICLES OF INCORPORATION 1 EXHIBIT 3(a) ARTICLES OF AMENDMENT AND RESTATEMENT of the ARTICLES OF INCORPORATION OF KOGER EQUITY, INC. 1. These Articles of Amendment amend and restate the Amended and Restated Articles of Incorporation of Koger Equity, Inc. 2. The Amended and Restated Articles of Incorporation of Koger Equity, Inc. are hereby amended to add a new subsection 10. to Section (D) of Article V to read as follows: 10. While nothing contained herein shall in any way limit the powers of the Board of Directors, neither the exercise of such power nor the provisions of subsections 5. and/or 8. of this Section (D) shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange. 3. This amendment was voted on by shareholders at their meeting on May 18, 2000, and the number of votes cast for the amendment by the shareholders was sufficient for approval of the amendment. 4. The new Amended and Restated Articles of Incorporation of Koger Equity, Inc. are attached hereto as Exhibit A and, by this reference, made a part hereof. 1 2 IN WITNESS WHEREOF, the undersigned Chairman of the Board and the Secretary of this Corporation have executed these Articles of Amendment, this 18th day of May, 2000. KOGER EQUITY, INC. Attest: /s/ W. Lawrence Jenkins /s/ Thomas J. Crocker - ------------------------------ -------------------------------- W. Lawrence Jenkins Thomas J. Crocker Secretary Chief Executive Officer STATE OF FLORIDA COUNTY OF DUVAL BEFORE ME, a notary public authorized to take acknowledgments in the state and county set forth above, personally appeared THOMAS J. CROCKER and W. LAWRENCE JENKINS, known by me to be the persons who executed the foregoing Articles of Amendment, and they acknowledged before me that they executed these Articles of Amendment. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, in the state and county aforesaid, this 18th day of May, 2000. Pamela K. Walker -------------------------------------- Notary Public, State of Florida at Large My Commission Expires: 2 3 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF KOGER EQUITY, INC. These Amended and Restated Articles of Incorporation of Koger Equity, Inc. amend and restate the Amended and Restated Articles of Incorporation as filed with the Secretary of State of the State of Florida on May 24, 1999. These Amended and Restated Articles of Incorporation were adopted by the Board of Directors on May 18, 2000, in accordance with Section 607.1007 of the Florida Business Corporation Act and include an amendment which was approved by the shareholders of Koger Equity, Inc. on May 18, 2000, in accordance with Section 607.1003 of the Florida Business Corporation Act. The substantive amendment to the Articles of Incorporation made in the Amended and Restated Articles of Incorporation is contained in subsection 10. to Section (D) of Article V hereof. ARTICLE I - NAME The name of the Company is KOGER EQUITY, INC. (the "Company"). ARTICLE II - DURATION The period of duration of the Company is perpetual. ARTICLE III - PURPOSE The purpose for which the Company is formed is to engage in any lawful act or activity for which corporations may be organized under the General Laws of the State of Florida as now or hereafter in force. ARTICLE IV - PRINCIPAL OFFICE AND MAILING ADDRESS The principal office and the mailing address of the Company in the State of Florida are 8880 Freedom Crossing Trail, Jacksonville, Florida 32256-8280. ARTICLE V - CAPITAL STOCK The total number of shares of stock that this corporation shall have authority to issue is 100,000,000 shares of Common Stock, each of which shall have a par value of $.01 per share (the "Common Stock") and 50,000,000 shares of Preferred Stock, each of which shall have a par value of $.01 per share (the "Preferred Stock"). The board of directors is authorized to issue the Preferred Stock from time to time in one or more classes or series thereof, each such class or series to have such 3 4 voting powers (if any), conversion rights (if any), designations, preferences and relative, participating, optional or other special rights, and such qualifications, limitations or restrictions thereof, as shall be determined by the board of directors and stated and expressed in a resolution or resolutions thereof providing for the issue of such Preferred Stock. Subject to the powers, preferences and rights of any Preferred Stock, including any class or series thereof, having any preference or priority over, or rights superior to, the Common Stock and except as otherwise provided by law, the holders of the Common Stock shall have and possess all powers and voting and other rights pertaining to the stock of this corporation and each share of Common Stock shall be entitled to one vote. Except as otherwise provided in the Articles of Incorporation and subject to the rights of the holders of Preferred Stock, the following is a description of the voting rights, limitations as to dividends, preemptive rights, restrictions, and terms and conditions of redemption of the Common Stock of the Company: (A) Voting Rights At every annual or special meeting of stockholders of the Company, every holder of Common Stock shall be entitled to one vote, in person or by proxy, for each share of Common Stock standing in the stockholder's name on the books of the Company in the election of directors and upon all other matters submitted to a vote of the stockholders of the Company. (B) Dividends and Liquidation Rights. 1. Dividends. The holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the Company which are legally available therefor, dividends payable either in cash, in property or in shares of Common Stock. 2. Dissolution, Liquidation or Winding Up. In the event of any dissolution, liquidation, or winding up of the affairs of the Company after payment or provision for payment of the debts and other liabilities of the Company, the holders of all outstanding shares of Common Stock shall be entitled to share ratably in the remaining net assets of the Company. (C) Preemptive Rights. 4 5 No stockholder of the Company shall have any preemptive or other right to purchase or subscribe for any shares of the Common Stock of the Company which it may issue or sell, whether now or hereafter authorized, other than such right, if any, as the Board of Directors in its discretion from time to time may determine. (D) Restrictions on Transfer; Redemption. 1. The stockholders shall upon demand disclose to the Board of Directors in writing such information with respect to direct and indirect ownership of the Common Stock of the Company as the Board of Directors deems necessary to comply with the provisions of the Internal Revenue Code of 1986, as amended or as hereafter amended if such amendments are applicable to the Company (the "Code"), pertaining to the qualification of the Company as a real estate investment trust (a "REIT") or to comply with the requirements of any taxing authority or governmental entity or agency. 2. Whenever it is deemed by the Board of Directors to be reasonably necessary to protect the tax status of the Company as a REIT, the Board of Directors may require a statement or affidavit from any stockholder or proposed transferee of shares of Common Stock setting forth the number of shares of Common Stock already owned by the stockholder and any related Person (as hereinafter defined) specified in the form prescribed by the Board of Directors for that purpose. If, in the opinion of the Board of Directors, which opinion shall be conclusive on the proposed transferor and transferee, the proposed transfer may jeopardize the qualification of the Company as a REIT, the Board of Directors has the right, but not a duty, to refuse to transfer the shares of Common Stock to the proposed transferee. All contracts for the sale or other transfer of shares of Common Stock shall be subject to this provision. 3. Notwithstanding any other provision of these Articles of Incorporation to the contrary and subject to the provisions of Section 6 of Paragraph (D) of this Article V, no person shall at any time directly or indirectly acquire ownership in the aggregate of more than 9.8% of the outstanding shares of Common Stock of the Company (the "Limit"). Shares of Common Stock owned by a Person in excess of the Limit at any time shall be deemed excess shares ("Excess Shares"). For purposes of this Article V a person shall be deemed to own shares of Common Stock actually owned by such Person after applying the rules of Section 544 of the Code as modified in the case of a REIT by Section 856(a)(6), Section 856(d)(3), and Section 856(h) of the Code. All shares of Common Stock which any Person has 5 6 the right to acquire upon exercise of outstanding rights, options, and warrants, and upon conversion of any securities convertible into shares of Common Stock, if any, shall be considered outstanding for purposes of the Limit if such inclusion will cause such Person to own more than the Limit. 4. If at any time the Board of Directors shall in good faith determine that direct or indirect ownership of shares of Common Stock of the Company by any Person or Persons has or may become concentrated to the extent which would cause the Company to fail to qualify or to be disqualified as a REIT or that any Person has acquired Excess Shares (including shares of Common Stock that remain or become Excess Shares because of the decrease in the outstanding shares of Common Stock resulting from such redemption), the Board of Directors shall have the power to call for the purchase from any stockholder of the Company, by notice to such stockholder, of a number of shares of Common Stock sufficient in the opinion of the Board of Directors to maintain or to bring the direct or indirect ownership of shares of Common Stock into conformity with the provisions of the Code pertaining to the qualification of the Company as a REIT and/or to redeem all shares of Common Stock that are Excess Shares owned by such Person. From and after the date fixed for redemption by the Board of Directors, the holder of any shares of Common Stock so called for redemption shall cease to be entitled to distributions, voting rights, and other benefits with respect to such shares of Common Stock, excepting only the right to payment by the Company of the redemption price pursuant to this Article V as set forth in the following paragraph. The redemption price of each share of Common Stock called for redemption shall be: (a) the average daily per share composite closing sales price if the shares of the Company are listed on a national securities exchange, and if the shares are not so listed shall be the mean between the average per share closing bid prices and the average per share closing asked prices, in each case during the twenty (20) trading day period ending on the business day prior to the redemption date, or (b) if there have been no sales on a national securities exchange and no published bid quotations and no published asked quotations with respect to shares of the Company during such twenty (20) trading day period, the redemption price shall be the price determined in good faith by the Board of Directors. In order to assure further that ownership of the shares of Common Stock of the Company does not become concentrated 6 7 so as to cause the Company to fail to qualify or to be disqualified as a REIT, any transfer of shares that would prevent the Company from continuing to be qualified as a REIT under the Code, including any attempt to effect a transfer that was prohibited by the Board of Directors under Section 6 of Paragraph (D) of this Article V, shall be void ab initio and the intended transferee of such shares shall be deemed never to have had any legal or equitable interest therein. If the foregoing provision is determined to be void and invalid by virtue of any legal decision, statute, rule, or regulation, then the transferee of such shares of Common Stock shall be deemed, at the option of the Company, to have acted as agent on behalf of the Company in acquiring such shares of Common Stock and to hold such shares of Common Stock on behalf of the Company. A conspicuous legend noting the restrictions on transfer set forth in these Articles of Incorporation shall be placed on each certificate evidencing ownership of shares of Common Stock of the Company. 5. Notwithstanding any other provision of these Articles of Incorporation or the By-Laws to the contrary, any purported acquisition of shares of Common Stock of the Company which results in the disqualification of the Company as a REIT under the Code shall be null and void. All contracts for the sale or other transfer of shares of Common Stock shall be subject to this provision. 6. The Limit set forth in Section 3 of this Article V shall not apply to acquisitions of shares of Common Stock pursuant to a cash tender offer made for all outstanding shares of Common Stock of the Company (including securities convertible into shares of Common Stock) in conformity with applicable federal and state securities laws where two-thirds (2/3) of the outstanding shares of Common Stock (not including shares of Common Stock or securities convertible into shares of Common Stock held by the tender offerer and/or any "affiliates" or "associates" thereof within the meaning of the Securities Exchange Act of 1934, as amended) are duly tendered and accepted pursuant to the cash tender offer; nor shall the limit apply to the acquisition of shares of Common Stock by an underwriter in a public offering of shares of Common Stock, or in any transaction involving the issuance of shares of Common Stock by the Company in which the Board of Directors determines that the underwriter or other person or party initially acquiring such shares of Common Stock will make a timely distribution of such shares of Common Stock to or among other holders such that, following such distribution, none of such shares of Common Stock will be Excess Shares. The Board of Directors in its discretion may exempt from the Limit 7 8 ownership of certain designated shares of Common Stock while owned by a Person who has provided the Company with evidence and assurances acceptable to the Board of Directors that the qualification of the Company as a REIT would not be jeopardized thereby. 7. As used in this Article V the word "Person" shall mean and include individuals, corporations, limited partnerships, general partnerships, joint stock companies or associations, joint venturers, companies, trusts, banks, trust companies, land trusts, business trusts, estates, or other entities and governments and agencies and political subdivisions thereof and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended. 8. Nothing contained in this Article V or in any other provision of these Articles of Incorporation shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Company and the interests of the stockholders by preserving the Company's qualification as a REIT under the Code. 9. If any provision of this Article V or any application of any such provision is determined to be invalid by any court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. To the extent this Article V may be inconsistent with any other provision of these Articles of Incorporation or the By-Laws, this Article V shall be controlling. 10. While nothing contained herein shall in any way limit the powers of the Board of Directors, neither the exercise of such power nor the provisions of subsections 5. and/or 8. of this Section (D) shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange. ARTICLE VI - MANAGEMENT The following provisions shall apply to the management of the business and to the conduct of the affairs of the Company and its directors, officers, and stockholders: (A) Further Powers of the Board of Directors. 1. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly 8 9 authorized to do the following: (a) To make, adopt, alter, amend, and repeal any of the By-Laws to the extent provided in the By-Laws; provided that the stockholders may make, adopt, alter, amend, and repeal any of the By-Laws; (b) To cause the redemption by the Company of shares of the Company's Common Stock, and to restrict the transfer of shares of Common Stock in the manner provided for in these Articles of Incorporation and the By-Laws; (c) To authorize, subject as may be required by any applicable governmental statute, rule, or regulation, or as provided in the By-Laws for stockholder approval and other conditions, if any, the execution and performance by the Company of one or more agreements with any person, corporation, association, company, trust, partnership (limited or general), or other organization whereby, subject to the supervision and control of the Board of Directors, any such other person, corporation, association, company, trust, partnership (limited or general), or other organization shall render or make available to the Company, managerial, investment advisory, and/or related services and facilities (including, if deemed advisable by the Board of Directors, the management or supervision of the investments of the Company) upon such terms and conditions as may be provided in such agreement or agreements (including, if deemed fair and reasonable by the Board of Directors, the compensation payable thereunder by the Company); (d) To authorize any agreement of the character described in Section 1(c) of this Paragraph (A) of this Article VI or other transaction with any person, corporation, association, company, trust, partnership (limited or general), or other organization, even though one or more of the members of the Board of Directors or officers of the Company may be the other party to any such agreement or an officer, director, stockholder, or member of such other party, and no such agreement or transaction shall be invalidated or rendered voidable solely by reason of the existence of any such relationship if (i) the existence is disclosed or known to: (x) the Board of Directors, and the Board of Directors authorizes, approves, or ratifies the agreement or transaction by the affirmative vote of a majority of the disinterested directors, even if the disinterested directors constitute less than a quorum; or (y) the stockholders of the Company entitled to 9 10 vote, and the agreement or transaction is authorized, approved, or ratified by a majority of votes cast by such stockholders without regard to the votes of shares owned of record or beneficially by the interested director or such other party; or (ii) the contract is fair and reasonable to the Company. Provided the disclosure, ratification, or fairness provisions of this subparagraph are satisfied, any member of the Board of Directors who is also a director or officer of such other party or who is so interested or associated with such other party may be counted in determining the existence of a quorum at any meeting of the Board of Directors which shall authorize any such agreement or transaction, and may vote thereat to authorize any such agreement or transaction, as if the director were not such director or officer of such other party or not so interested or so associated; (e) To allot and authorize the issuance of the authorized but unissued shares of Common Stock of the Company for such consideration as the Board of Directors may deem advisable, subject to such limitations as may be set forth in these Articles of Incorporation or the By-Laws of the Company; and (f) To authorize the issuance and fix the terms, conditions, and provisions of options to purchase and subscribe for shares of Common Stock of the Company, including the option price or prices for which shares of Common Stock of the Company may be purchased or subscribed. 2. The determination as to any of the following matters made by or pursuant to the direction of the Board of Directors consistent with these Articles of Incorporation and in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of duties, shall be final and conclusive and shall be binding upon the Company and every holder of the shares of its Common Stock: (a) the amount of net income of the Company for any period and the amount of assets at any time legally available for the payment of dividends; (b) the amount of paid-in surplus, other surplus, annual or other net profit, or net assets in excess of capital, undivided profits, or excess of profits over losses on sales of assets; (c) the amount, purpose, time of creation, increase or decrease, alteration, or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); (d) the fair values, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Company; and 10 11 (e) any matter relating to the acquisition, holding, and disposition of any assets by the Company. 3. The enumeration and definition of particular powers of the Board of Directors included in this Article VI shall in no way be limited or restricted by reference to or inference from the terms of any other clause of this or any other Article of these Articles of Incorporation, or construed as or deemed by inference or otherwise in any manner to exclude or limit the powers conferred upon the Board of Directors under the Florida Business Corporation Act of the State of Florida as now or hereafter in force. ARTICLE VII - AMENDMENTS The Company reserves the right to make any amendments to its Articles of Incorporation which may be now or hereafter authorized by law, including any amendments changing the terms or contract rights of any of its outstanding stock by classification, reclassification, or otherwise, provided such amendment shall have been authorized by the affirmative vote of a majority of the aggregate number of shares entitled to vote thereon at a meeting of the stockholders of the Company or in writing by the stockholders of the Company with or without a meeting. All rights and powers conferred by these Articles of Incorporation on stockholders, directors, and officers are granted subject to this reservation. ARTICLE VIII - INDEMNIFICATION The Company shall indemnify each of its officers and directors to the fullest extent permitted by the Florida Business Corporation Act as now or hereafter in force, including the advance of expenses and reasonable counsel fees. ARTICLE IX - CONFLICT The officers and directors of the Company may without restriction make real estate investments for their own account or for the account of others, and the directors are not required to bring to the Company's attention investment opportunities meeting the Company's investment criteria. The directors of the Company are not prohibited from engaging in the same activities or lines of business as the Company. ARTICLE X - LIABILITY The liability of the directors and officers of the Company to the Company or its stockholders for money damages shall be limited to the maximum extent that the liability of directors and 11 12 officers of corporations organized and existing under the laws of the State of Florida is permitted to be limited by Florida law, including the Florida Business Corporation Act, as now or hereafter in effect. Neither the amendment nor repeal of this Article, nor the adoption of any provision of the Articles of Incorporation or By-Laws inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. ARTICLE XI - ACTION BY SHAREHOLDERS Actions shall be taken by the shareholders of the Company only at annual or special meetings of shareholders, and shareholders may not act by written consent. IN WITNESS WHEREOF, the undersigned Chief Executive Officer of Koger Equity, Inc. has executed these Amended and Restated Articles of Incorporation this 18th day of May, 2000. KOGER EQUITY, INC. By: /Thomas J. Crocker -------------------------- Thomas J. Crocker Chief Executive Officer 12 EX-3.(B) 3 g65182ex3-b.txt AMENDED AND RESTATED BY-LAWS 1 EXHIBIT 3(b) KOGER EQUITY, INC. BY-LAWS AS AMENDED AND RESTATED ON FEBRUARY 17, 2000 ARTICLE I OFFICES SECTION 1. Registered Office. The registered office of the Company shall be in the State of Florida and shall be at such place as the Board of Directors of the Company (the "Board of Directors") may determine. SECTION 2. Principal Executive Office. The principal executive office of the Company shall be in the City of Jacksonville, State of Florida, or in such other place as the Board of Directors may from time to time determine. SECTION 3. Other Offices. The Company may also have offices at such other places, both within and outside of the State of Florida as the Board of Directors may from time to time determine. ARTICLE II STOCKHOLDERS SECTION 1. Place of Meetings. Meetings of the stockholders of the Company shall be held at such place, either within or outside of the State of Florida as shall be determined from time to time by the Board of Directors and stated in a notice of meeting or in a duly executed waiver of notice thereof. SECTION 2. Annual Meeting. The annual meeting of the stockholders shall be held on such day in the month of May, or in such other month, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Except as the Articles of Incorporation of the Company (the "Articles of Incorporation") or the Florida Business Corporation Act (the "Act") may provide otherwise, any business may be considered at an annual meeting. Failure to hold an annual meeting does not invalidate the Company's existence or affect any otherwise valid corporate acts. 1 2 SECTION 3. Special Meeting. Except as the Articles of Incorporation or the Act may otherwise provide, Special Meetings of the stockholders, for any purpose or purposes, may be called by the Chairman of the Board of Directors, by the Vice Chairman of the Board of Directors, by the Chief Executive Officer, by the President or by a majority of the Board of Directors or upon the written request of stockholders holding in the aggregate at least ten percent (10%) in amount of the entire outstanding capital stock of the Company issued and outstanding and entitled to vote at such meeting. If a special meeting is called at the written request of stockholders, such request shall state with specificity the purpose or purposes of such meeting and the matters proposed to be acted on. Any business of the Company transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice thereof. SECTION 4. Notice of Meetings and Waiver of Notice. Not less than ten (10) days nor more than sixty (60) days before the date of any meeting of stockholders, written or printed notice of the meeting shall be given to each stockholder entitled to vote at the meeting and to each other stockholder not entitled to vote who is entitled by statute to receive notice of the meeting. The notice shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder's residence or usual place of business, or mailed to the stockholder at the stockholder's address as it appears on the records of the Company. If such notice is mailed with postage thereon prepaid, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder's post office address as it appears on the records of the Company. In the case of a special meeting of stockholders convened at the written request of the stockholders, as provided for in Section 3 of this Article II, the notice herein provided for shall be given in the manner herein provided, not less than ten (10) days nor more than sixty (60) days before the date of the meeting. Notwithstanding the foregoing provisions, each person who is entitled to notice of any meeting of stockholders waives notice if the stockholder attends such meeting in person or by proxy, or if the stockholder, before or after the meeting, submits a signed waiver of the notice which is filed with the records of stockholders' meetings. When a meeting of stockholders is adjourned to another time and place, unless the Board of Directors after the adjournment shall fix a new record date for an adjourned meeting, notice of such adjourned meeting need not be given if the time and place to which the meeting shall be adjourned were announced at the meeting at which the adjournment was taken. SECTION 5. Quorum and Voting. The holders of a majority of the stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by the Act or the Articles of Incorporation. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or 2 3 represented by proxy shall decide any question, unless such question is one upon which by express provision of the Act or the Articles of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or by proxy, by majority vote and without notice other than announcement at the meeting, except as required by Section 4 of this Article II, shall have power to adjourn the meeting from time to time until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. In the event that at any meeting a quorum exists for the transaction of some business but does not exist for the transaction of other business, the business as to which a quorum is present may be transacted by the holders of stock present in person or by proxy who are entitled to vote thereon. SECTION 6. General Right to Vote and Proxies. Each outstanding share of stock is entitled to one (1) vote on each matter submitted to a vote at a meeting of stockholders. A stockholder may vote the stock the stockholder owns as shown on the record of stockholders of the Company as of the record date, determined pursuant to Section 7 of this Article II, either in person or by written proxy signed by the stockholder or by the stockholder's duly authorized attorney-in-fact, but no proxy shall be voted or acted upon after eleven (11) months from its date, unless the proxy provides for a longer period. SECTION 7. Fixing of Record Date and List of Stockholders. In order that the Company may determine the stockholders (a) entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or (b) entitled to receive payment of any dividend or other distribution or allotment of any rights, or (c) entitled to exercise any rights with respect to any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date which shall not be less than ten (10) days nor more than seventy (70) days before the date then fixed for the holding of any meeting of the stockholders, nor more than seventy (70) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting which it must do if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting. At any meeting of stockholders, a full, true and complete list of all stockholders entitled to vote at such meeting, showing the number and class of shares held by each and certified by the transfer agent for such class or by the Secretary, shall be furnished by the Secretary. SECTION 8. Organization and Order of Business. At each meeting of the stockholders, the Chairman of the Board of Directors, or in the Chairman's absence or inability to act, the Vice Chairman of the Board of Directors or in the Chairman's or Vice Chairman's absence or inability to act, the Chief Executive Officer of the Company, or in the absence or inability to act of the Chairman of the Board, Vice Chairman of the Board or the Chief Executive Officer, the President of the Company or in the absence or inability to act of the Chairman of the Board, Vice Chairman of the 3 4 Board, Chief Executive Officer or the President, a Vice President of the Company designated by the Board of Directors shall act as Chairman of the meeting. The Secretary of the Company, or in the Secretary's absence or inability to act, any person appointed by the Chairman of the Board or the presiding Chairman of the meeting, shall act as Secretary of the meeting and keep the minutes thereof. The order of business of all meetings of the stockholders shall be determined by the Chairman of the meeting, who shall have the authority in his discretion to regulate the conduct of such meeting, including, without limitation, to impose restrictions on the persons (other than stockholders of the corporation or their duly appointed proxies) who may attend such meeting, to regulate and restrict the making of statements or asking of questions at such meeting and to cause the removal from such meeting of any person who has disrupted or appears likely to disrupt the proceedings at such meeting. At a meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting of stockholders, business must be (a) specified in the notice of meeting (or any supplement thereto) given as provided in these by-laws, (b) otherwise properly brought before the meeting by or at the direction of a majority of the Board of Directors then in office, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation and the stockholder must be a stockholder of record at the time such notice is given. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation, not less than seventy (70) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that the date of the meeting is not publicly announced by the Corporation by mail, press release or otherwise more than seventy (70) days prior to the meeting, notice by the stockholder to be timely must be delivered to the Secretary of the Corporation not later than the close of business on the tenth (10th) day following the day on which such announcement of the date of the meeting was made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and address, as it appears on the corporation's books, of the stockholder proposing such business, (c) the number of shares of the corporation's common stock which are beneficially owned by the stockholder, and (d) any material financial interest of the stockholder in such business. Notwithstanding anything in these by-laws to the contrary, no business shall be conducted at any meeting except in accordance with the procedures set forth in this Section 8, and if the Chairman of the meeting should so determine, he shall so declare to the meeting any such business not properly brought before the meeting shall not be transacted Notwithstanding the foregoing provisions of this Section 8, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section. SECTION 9. Conduct of Voting. At all meetings of stockholders, the proxies and ballots shall be received, and all questions concerning the qualifications of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the Chairman of the meeting. 4 5 ARTICLE III BOARD OF DIRECTORS SECTION 1. General Powers. The business and affairs of the Company shall be managed under the direction of its Board of Directors. All powers of the Company may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to the stockholders by the Act, the Articles of Incorporation or these By-Laws. SECTION 2. Number of Directors. The number of Directors which shall constitute the whole Board of Directors shall not be less than one (1), with the exact number of Directors as may be fixed from time to time by resolution of the Board of Directors. The initial Board of Directors shall consist of three (3) Directors until changed as herein provided, a majority of which Directors shall be persons who are not Affiliates (as defined in Section 4 of Article IX of these By-Laws) or employees of any independent contractor of the Company or an Affiliate (as defined in Section 4 of Article IX of these By-Laws) of such independent contractor. Directors need not be stockholders of the Company. SECTION 3. Nomination, Election and Tenure of Directors. Nominations for the election of Directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of Directors. Any stockholder entitled to vote for the election of Directors at a meeting may nominate persons for election as Directors by giving timely notice thereof in proper written form to the secretary accompanied by a petition signed by at least one hundred (100) record holders of the common stock of the corporation which shows the number of shares held by each person and which represent in the aggregate one percent (1%) of the outstanding shares entitled to vote in the election of Directors. To be timely, notice shall be delivered to or mailed and received at the principal executive offices not less than seventy (70) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the meeting is given or made to the stockholders, to be timely, notice by the stockholder must be received at the principal executive offices not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper written form, a stockholder's notice shall set forth in writing (i) as to each person whom the stockholder proposes to nominate for election or re-election as a Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including, without limitation, such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected and (ii) as to the stockholder giving the notice (x) the name and address, as they appear on the corporation's books, of such stockholder and (y) the number of shares of the corporation which are beneficially owned by such stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a Director shall furnish to the secretary the information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. In the event that a stockholder seeks to nominate one or more Directors, the secretary shall appoint one or more inspectors to determine whether a stockholder has complied with this Section 3. 5 6 If the inspectors shall determine that a stockholder has not complied with this Section 3, the inspectors shall direct the Chairman of the meeting to declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the by-laws, and the Chairman shall so declare to the meeting and the defective nomination shall be disregarded. Except as provided in Section 5 of this Article III, the Directors shall be elected at the annual meeting of stockholders and shall hold office until the next annual meeting and until their successors are elected and qualified, unless sooner displaced. Directors are eligible for re-election, and a Director may resign at any time by giving written notice to the Company. SECTION 4. Removal of Director. The stockholders may remove any Director or Directors at any time, with or without cause, by the affirmative vote of a majority of all the votes entitled to be cast for the election of Directors and may elect a successor or successors to fill any resulting vacancies for the unexpired terms of the removed Directors. A majority of the Directors may remove a Director for cause. SECTION 5. Vacancies on the Board of Directors. A majority of the remaining Directors, whether or not sufficient to constitute a quorum, or a sole remaining Director, may fill a vacancy on the Board of Directors which results from any cause except an increase in the number of Directors, and a majority of the entire Board of Directors may fill a vacancy which results from an increase in the number of Directors. A Director elected by the Board of Directors to fill a vacancy serves for the balance of the term of the replaced Director, unless sooner displaced. SECTION 6. Regular Meetings. After each meeting of stockholders at which a Board of Directors shall have been elected, the Board of Directors so elected shall meet as soon as practicable for the purpose of organization and the transaction of other business. No notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present. Any other regular meeting of the Board of Directors shall be held at such time and at any place within or outside of the State of Florida as may be determined by the Board of Directors, the Chairman of the Board of Directors, Vice Chairman of the Board of Directors, the Chief Executive Officer of the Company, or the President of the Company. SECTION 7. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the Chief Executive Officer of the Company, the President of the Company, or by a majority of the Board of Directors by vote at a meeting, or by a majority of the Board of Directors in writing without a meeting. A special meeting of the Board of Directors shall be held on such date and at any place within or outside of the State of Florida as may be designated from time to time by the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the Chief Executive Officer of the Company, the President of the Company or the Board of Directors. SECTION 8. Notice of Meeting. Except for regular meetings held after a meeting of the stockholders as provided in Section 6 of this Article III, the Secretary of the Company, or in the Secretary's absence or inability to act, any officer of the Company appointed by the Chairman of the 6 7 Board of Directors, the Vice Chairman of the Board of Directors, the Chief Executive Officer of the Company, or the President of the Company, shall give notice to each Director of each regular and special meeting of the Board of Directors. The notice shall state the date and place of the meeting. Notice is given to a Director when it is delivered personally to him, left at his residence or usual place of business, or sent by telegraph, cablegram, or telephonic communication, at least twenty-four (24) hours prior to the time of the meeting or, in the alternative, by first-class mail, postage prepaid, addressed to the Director at his post office or his address as it appears on the records of the Company, at least four (4) days before the day on which such meeting is to be held. If mailed with postage prepaid, such notice shall be deemed to be given when deposited in the United States mail addressed to the Director at his address as it appears in the records of the Secretary. The notice need not state the business to be transacted at or the purpose of the meeting. No notice of any meeting of the Board of Directors need be given to any Director who attends, or to any Director who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. Any meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement. SECTION 9. Action by Directors. The action of a majority of the Directors present at a meeting at which a quorum of the Board of Directors is present constitutes action of the Board of Directors, except as otherwise provided in the Act, the Articles of Incorporation, or these By-Laws in respect of any investment or action by the Company which involves a potential conflict of interest between the Company and any independent contractor retained by the Company or any Affiliate (as defined in Section 4 of Article IX of these By-Laws) of any such independent contractor. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business. In the absence of a quorum, the Directors present, by majority vote and without notice other than by announcement, may adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 10. Organization. The Chairman of the Board of Directors of the Company shall preside at each meeting of the Board of Directors. In the absence or inability of the Chairman of the Board to preside at a meeting, the Vice Chairman of the Board of Directors of the Company shall preside at a meeting. In the absence or inability of either of the Chairman or Vice Chairman of the Board to preside at a meeting, the Chief Executive Officer of the Company shall preside at a meeting. In the absence or inability of the Chairman of the Board, the Vice Chairman of the Board, or the Chief Executive Officer to preside at a meeting, the President of the Company shall preside at a meeting. In the absence or inability of the Chairman of the Board, Vice Chairman of the Board, the Chief Executive Officer or the President to preside at a meeting, another Director chosen by a majority of the Directors present, shall act as Chairman of the meeting and preside thereat. The Secretary of the Company or, in the Secretary's absence or inability to act, any person appointed by the Chairman of the Board or the presiding Chairman shall act as Secretary of the meeting and keep the minutes thereof. 7 8 SECTION 11. Meeting by a Conference Telephone. Members of the Board of Directors or of any committee thereof may participate in a meeting by means of a conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at a meeting. SECTION 12. Consent in Lieu of Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if a written consent to such action is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent or consents are filed with the minutes of proceedings of the Board of Directors or committee. SECTION 13. Compensation. Directors may receive compensation for services to the Company in their capacities as Directors in such manner and in such amounts as may be fixed from time to time by the Board of Directors, and expenses, if any, of attendance at each regular or special meeting of the Board of Directors, or any committee of the Board of Directors, or any meeting of stockholders. No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor. ARTICLE IV COMMITTEES OF DIRECTORS SECTION 1. Committees. The Board of Directors may, by resolution adopted by a majority of the full Board of Directors, appoint or designate one or more committees, each committee of the Board of Directors to consist of two (2) or more Directors, and may delegate to such committees any of the powers of the Board of Directors except such powers as are required to be performed by the Board of Directors under the Act, the Articles of Incorporation, or these By-Laws. SECTION 2. Minutes and Reports. Each committee of the Board of Directors shall keep minutes of its proceedings and shall report the same to the Board of Directors, and any action taken by the committees shall be subject to revision and alteration by the Board of Directors, provided that no rights of third persons shall be affected by any such revision or alteration. SECTION 3. Notice. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors, and a waiver thereof in writing, signed by the Director entitled to such notice and filed with the records of the meeting, whether before or after the holding thereof, or actual attendance at the committee meeting in person shall be deemed equivalent to the giving of such notice to such Director. SECTION 4. Quorum, Voting and General. One-third (1/3), but not less than two (2), of the members of any committee shall be present in person at any meeting of such committee in order to 8 9 constitute a quorum for the transaction of business at such meeting, and the act of the majority present shall be the act of such committee. The Board of Directors or the Chairman of the Board of Directors may designate a chairman of any committee and such chairman or any two members of any committee may fix the time and place of its meetings unless the Board of Directors shall otherwise provide. The Board of Directors shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member, or to dissolve any such committee. ARTICLE V OFFICERS SECTION 1. The officers of the Company shall consist of a Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, a Chief Executive Officer, a President, a Secretary, a Chief Financial Officer, a Chief Accounting Officer, and a Treasurer, each of whom shall be elected by the Board of Directors at the first meeting of directors immediately following the annual meeting of shareholders of the Company, and shall serve until their successors are chosen and qualified. Such other officers and assistant officers and agents, as may be deemed necessary, may be elected or appointed by the Board of Directors, the Chief Executive Officer or the President from time to time. Any two (2) or more offices may be held by the same person. The failure to elect a Chairman of the Board of Directors, a Vice Chairman of the Board of Directors, a Chief Executive Officer, a President, a Secretary, a Chief Financial Officer, a Chief Accounting Officer or Treasurer shall not affect the existence of the Company. SECTION 2. Duties. The officers of the Company shall have the following duties: The CHAIRMAN OF THE BOARD OF DIRECTORS shall preside at all meetings of Shareholders and the Board of Directors of this corporation. The VICE CHAIRMAN OF THE BOARD OF DIRECTORS shall, in the absence of the Chairman of the Board of Directors, preside at all meetings of the stockholders and the Board of Directors. The CHIEF EXECUTIVE OFFICER shall have general supervisory authority over the management of the business and affairs of this corporation, subject to the direction of the Board of Directors and in the absence of the Chairman of the Board of Directors and the Vice Chairman of the Board of Directors, shall preside at all meetings of the stockholders and the Board of Directors. The PRESIDENT shall have general and active management of the business and affairs of the corporation subject to the directions of the Chief Executive Officer and the Board of Directors, and in the absence of the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors and the Chief Executive Officer, shall preside at all meetings of the stockholders and the Board of Directors. 9 10 The SECRETARY shall have custody of, and maintain, all of the corporate records except the financial records; shall record the minutes of all meetings of the shareholders and Board of Directors, send all notices of meetings out, and perform such other duties as may be prescribed by the Board of Directors, Chief Executive Officer or the President. The CHIEF FINANCIAL OFFICER shall have general and active management of the financial affairs of the corporation subject to the directions of the Chief Executive Officer, the President and the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors, the Chief Executive Officer or the President. The CHIEF ACCOUNTING OFFICER shall have custody of all corporate funds and financial records, shall keep full and accurate accounts of receipts and disbursements and render accounts thereof at the annual meetings of stockholders and whenever else required by the Board of Directors, the Chief Executive Officer or the President, and shall perform such other duties as may be prescribed by the Board of Directors, the Chief Executive Officer, the President or the Chief Financial Officer. The TREASURER shall assist the Chief Accounting Officer in the performance of his or her duties and perform such other duties as may be prescribed by the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer or the Chief Accounting Officer. SECTION 3. Removal of Officers. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment the best interests of the Company will be served thereby. Any officer or agent elected by the stockholders may be removed only by vote of the stockholders, unless the stockholders shall have authorized the Directors to remove such officer or agent. Any officer or agent elected or appointed by either of the Chief Executive Officer or the President may be removed by the officer who appointed such officer or by the Board of Directors. Any vacancy, however occurring, in any office may be filled by the Board of Directors. Removal of any officer shall be without prejudice to the contract rights, if any, of the person so removed; however, election or appointment of an officer or agent shall not of itself create contractual rights. ARTICLE VI INVESTMENT POLICIES SECTION 1. General. The Board of Directors shall determine the Company's investment 10 11 policies and shall review those policies at least annually to determine that the policies are being followed by the Company and are in the best interests of its stockholders. It shall be the duty of the Board of Directors to insure that the purchase, sale, retention and disposal of Company assets, and the investment policies of the Company and the limitations thereon or amendment thereof are at all times in compliance with the restrictions applicable to real estate investment trusts pursuant to the Internal Revenue Code of 1986, as it may be amended from time to time (the "Internal Revenue Code"). The Company will not, without the approval of a majority of the Board of Directors, acquire from or sell to a Director, an officer or employee of the Company, any person in which a Director owns more than a one percent (1%) interest, or any Affiliate (as defined in Section 4 of Article IX of these By-Laws) of any of the foregoing, any of the assets or other property of the Company, or make loans to any of the foregoing. SECTION 2. Limitations. Each of the following limitations shall apply only to the extent that each limitation must be satisfied in order for the Company to qualify as a real estate investment trust under the Internal Revenue Code, and to the extent that each limitation is required for such qualification, each limitation may not be changed without the approval of the holders of a majority of the outstanding shares: (1) the Company may not hold property primarily for sale to customers in the ordinary course of business; (2) the Company may not issue "redeemable securities" as defined in the Investment Company Act of 1940; (3) the Company may not invest in any real estate investment trust which holds investments or engages in activities which the Company would be prohibited from engaging in by these By-Laws; (4) the Company may not invest in commodities or commodity future contracts other than "financial futures" contracts intended to hedge the Company against losses from its temporary investments; (5) the Company may not invest more than one percent (1%) of its assets in real estate contracts of sale, unless such contracts are recordable in the chain of title; and (6) the Company may not engage in trading (as compared with investment activities) or engage in the underwriting or the agency distribution of securities issued by others. ARTICLE VII STOCK SECTION 1. Certificate for Stock. Every holder of stock in the Company shall be entitled to have a certificate or certificates which represents and certifies the number and kind and class of shares of stock owned by each such stockholder in the Company. Certificates for fractional shares shall not be issued. Each stock certificate shall include on its face the name of the Company, the name of the stockholder or other person to whom it is issued, the class of stock and the number of shares represented by the certificate. It shall be in such form, not inconsistent with the Act or with the Articles of Incorporation, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the 11 12 Chief Executive Officer, the President, or a Vice President, and countersigned by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. Where a certificate is countersigned: (i) by a transfer agent other than the Company or its employee; or (ii) by a registrar other than the Company or its employee, any other signature on the certificate may be facsimile. In case any officer, transfer agent or registrar, who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may nevertheless be issued by the Company with the same effect as if such officer, transfer agent or registrar had not ceased to be such as of the date of its issue. SECTION 2. Transfers. The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar may be combined. SECTION 3. Stock Ledger. The Company shall maintain a stock ledger which contains the name and address of each stockholder of the Company and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form capable of producing copies for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of the transfer agent, within or outside the State of Florida, or, if none, at the principal executive office of the Company. SECTION 4. Lost, Destroyed or Mutilated Certificates. Subject to such rules, regulations and procedures as may be determined or set by the Board of Directors, the holder of any certificates representing shares of stock in the Company shall immediately notify the Company of any loss, destruction or mutilation of such certificate, and the Company may issue a new certificate of stock in the place of any certificate theretofore issued by the Company upon the making of an affidavit of that fact by the person claiming the certificate of stock to be stolen, lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such stolen, lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and to give the Company a bond, with sufficient surety, to indemnify it against any loss or claim which may arise by reason of the issuance of a new certificate. SECTION 5. Payment of Redeemed Shares. Any shares of stock in the Company, redeemed by the Company as Excess Shares pursuant to the provisions of Paragraph (d) of Article V - CAPITAL STOCK of the Articles of Incorporation, shall be paid for by the Company at the redemption price, as provided in Article V of the Articles of Incorporation, as soon as reasonably practicable after the receipt by the stockholder of the notice calling the Excess Shares for redemption by the Company. 12 13 ARTICLE VIII FINANCE SECTION 1. Checks, Drafts, Etc. All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness issued in the name of the Company shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. SECTION 2. Fiscal Year. The fiscal year of the Company shall be the calendar year. ARTICLE IX SUNDRY PROVISIONS SECTION 1. Books and Records. The Company shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. SECTION 2. Distributions to Stockholders. Each distribution to stockholders of income or capital assets shall be accompanied by a written statement disclosing the source of the funds distributed. The amount and date of distributions to stockholders shall be determined in the sole discretion of the Board of Directors of the Company. SECTION 3. Transactions With Affiliates. Except as otherwise provided in the Articles of Incorporation or these By-Laws, the Company shall not enter into any transaction with any independent contractor retained by the Company or any Affiliate (as defined in Section 4 below) of such independent contractor, or with any officer or Director, or any Affiliate of any officer of Director unless: (i) such transaction is approved by a majority of the Directors, who are not Affiliates (as defined in Section 4 below) of such independent contractor or a party to the transaction or (ii) such transaction is approved by the stockholders of the Company; or (iii) such transaction is fair and reasonable to the Company and its stockholders; or (iv) the terms of such transaction are at least as favorable as the terms of any comparable transaction made on an arm's length basis and known to the Board of Directors; or (v) the appraised value of any property being acquired in such transaction is not less than the total consideration paid by the Company in such transaction. SECTION 4. Affiliates Defined. As used in these By-Laws, the term "Affiliate" of another person shall mean any person directly or indirectly owning, controlling, or holding with power to vote, five percent (5%) or more of the outstanding voting securities of such other person; any person, five percent (5%) or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such person; any person directly or indirectly controlling, controlled by, or under common control with, such other person; and any officer, Director, or employee of such person. The term "person" includes a natural person, company, corporation, trust, partnership (limited or general) or any other organization. 13 14 SECTION 5. Company Seal. There shall be a suitable seal, bearing the name of the Company, which shall be in the charge of the Secretary. It shall be in such form, not inconsistent with the Act or with the Articles of Incorporation, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. SECTION 6. Amendments. Any and all provisions of these By-Laws may be altered or repealed and new By-Laws may be adopted by the stockholders of the Company at any regular or special meeting in accordance with Section 5 of Article II of these By-Laws, or by the Board of Directors. - ------------------------------ February 17, 2000 14 EX-10.(J)(2)(E) 4 g65182ex10-j2e.txt AMENDMENT OF TRANCHE B PROMISSORY NOTE 1 Exhibit 10(j)(2)(E) LOAN NO. C-331971 FIRST AMENDMENT OF TRANCHE B PROMISSORY NOTE THIS FIRST AMENDMENT OF TRANCHE B PROMISSORY NOTE (this "First Amendment") is made as of the 11th day of August, 2000, between, KOGER EQUITY, INC., a Florida corporation, 3986 Boulevard Center Drive, Jacksonville, FL 32207, hereinafter called "Obligor" and THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation, 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, hereinafter called "Northwestern"; and WHEREAS, Northwestern is the owner of a certain Tranche B Promissory Note in the original principal amount of $89,500,000 dated as of December 16, 1996 (the "Note") executed by Obligor and secured, along with the Tranche A Promissory Note, by a lien on property (the "Property") described in a Master Lien Instrument (the "Lien Instrument") dated as of December 16, 1996, securing aggregate indebtedness in the original amount of $190,000,000.00 executed by Obligor; AND WHEREAS, Northwestern has been requested to amend certain terms of the Note; and NOW, THEREFORE, in consideration of the above and of the mutual agreements herein contained, the undersigned parties agree to the following: 1. Unless otherwise defined herein, words and terms used herein shall have the same meaning as defined in the Note. 2. The following paragraph is hereby added to the prepayment terms of the Note: In addition to any other right or obligation of prepayment contained in the Note, unless the Substitution (as defined below) occurs, Borrower hereby agrees to make a prepayment (the "Mandatory Prepayment") of principal in the amount of $9,000,000 plus a prepayment fee equal to the Prepayment Fee, calculated however only on the $9,000,000 being prepaid. The Mandatory Prepayment shall be made on the 190th day after the date hereof. The term "Substitution" means that Borrower has, within 180 days after the date hereof, substituted a property for the property described in the Lien Instrument as the Pool B Park located in the City of El Paso, El Paso County, Texas which is being released concurrently herewith. The 1 2 Substitution must satisfy each of the conditions in the Lien Instrument under the section titled "Property Substitution." 3. The securing clause, found on page 4 of the Note, is hereby deleted in its entirety and the following inserted in lieu thereof: This note is secured by a lien instrument in multiple counterparts, each of even date herewith executed by KOGER EQUITY, INC., a Florida corporation to THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY or to JOHN S. SHOAF, JR. or MICHAEL P. CUSICK, as Trustee for the benefit of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (the "Master Lien Instrument"), encumbering certain properties situated in the following locations as more particularly described in the Master Lien Instrument: (i) Memphis, Shelby County, Tennessee; (ii) San Antonio, Bexar County, Texas; (iii) Austin, Travis County, Texas; (iv) St. Petersburg, Pinellas County, Florida; (v) Tallahassee, Leon County, Florida; (vi) Greenville, Greenville County, South Carolina; (vii) Jacksonville, Duval County, Florida; (viii) Orlando, Orange County, Florida.
4. The following paragraph is added as the last paragraph of the Note: Notwithstanding the above, unless the Substitution is made or the Mandatory Prepayment is made, Borrower shall be personally liable, i.e. the limitation of Lender's recourse provided herein will not be applicable for the last $9,000,000.00 of the indebtedness evidenced hereby. 5. Except as hereby amended the Note shall remain in full force and effect, unchanged and in all respects, ratified and confirmed. 6. Nothing herein contained shall affect the priority of the Lien Instrument over other liens, charges, encumbrances or conveyances nor shall it release or change the liability of any party who may now or hereafter be liable, primarily or secondarily, under or on account of the Note. 2 3 IN WITNESS WHEREOF, this First Amendment has been executed by the undersigned as of the date and year first above written. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation By: Northwestern Investment Management Company, a Wisconsin corporation, its wholly owned subsidiary and authorized representative By /s/ DONALD L. O'DELL -------------------------------------- Donald L. O'Dell, Managing Director Attest /s/KATHLEEN S. WARNER ---------------------------------- Kathleen S. Warner, Assistant Secretary (corporate seal) KOGER EQUITY, INC., a Florida corporation By: /s/G. DANNY EDWARDS ----------------------------------------- G. Danny Edwards - Treasury Attest: /s/ DIANA R. PAYNE ------------------------------------- Assistant Corporate Secretary 3 EX-11 5 g65182ex11.txt EARNINGS PER SHARE COMPUTATIONS 1 EXHIBIT 11 EARNINGS PER SHARE COMPUTATIONS (IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTH PERIOD NINE MONTH PERIOD ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, -------------------- ------------------- 2000 1999 2000 1999 ---- ---- ---- ---- EARNINGS PER COMMON AND DILUTIVE POTENTIAL SHARE: Net Income $ 9,346 $11,538 $20,541 $28,412 ======= ======= ======= ======= Shares: Weighted average number of common shares outstanding - Basic 26,710 26,725 26,707 26,664 Effect of dilutive securities (a): Stock options 210 376 284 339 ------- ------- ------- ------- Adjusted common shares - Diluted 26,920 27,101 26,991 27,003 ======= ======= ======= ======= EARNINGS PER SHARE - DILUTED $ 0.35 $ 0.43 $ 0.76 $ 1.05 ======= ======= ======= =======
(a) Shares issuable were derived using the "Treasury Stock Method" for all dilutive potential shares. EX-15 6 g65182ex15.txt LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION 1 EXHIBIT 15 November 10, 2000 Koger Equity, Inc. 8880 Freedom Crossing Trail Jacksonville, Florida 32256 We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Koger Equity, Inc. and subsidiaries for the periods ended September 30, 2000 and 1999, as indicated in our report dated October 27, 2000, because we did not perform an audit, we expressed no opinion on such financial information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, is incorporated by reference in Registration Statement No. 33-55179 of Koger Equity, Inc. on Form S-3, Registration Statement No. 33-54617 of Koger Equity, Inc. on Form S-8, Registration Statement No. 333-20975 of Koger Equity, Inc. on Form S-3, Registration Statement No. 333-23429 of Koger Equity, Inc. on Form S-8, Registration Statement No. 333-37919 of Koger Equity, Inc. on Form S-3, Registration Statement No. 333-33388 of Koger Equity, Inc. on Form S-8 and Registration Statement No. 333-38712 of Koger Equity, Inc. on Form S-8. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statements prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP Certified Public Accountants Jacksonville, Florida EX-27 7 g65182ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF KOGER EQUITY, INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 4,096 0 12,265 548 0 0 964,872 147,445 849,274 0 336,405 0 0 295 450,114 849,274 0 126,372 0 48,941 42,165 622 20,559 20,522 (19) 20,541 0 0 0 20,541 0.77 0.76 THE COMPANY DOES NOT FILE A CLASSIFIED BALANCE SHEET, THEREFORE THESE NOT PROVIDED 5-02(9), 5-02(21)
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